Wednesday, 30 October 2019

Saudi Aramco to hit the Tadawul on 11 December -report

TL;DR

What We’re Tracking Today

Habemus Aramco IPO date: Mark your calendars, as Aramco (known modestly as “potentially the largest IPO in History”) is set to begin trading on the Saudi stock exchange on 11 December. The Saudi government is expected to officially announce the decision next Sunday, with subscription to the offering looking set to commence on 4 December.

A lot is riding on this IPO, not only for Saudi, but for the rest of the region, who see it as a litmus test for investors. Egyptian officials have said that resumption of Egypt’s privatization program will definitely follow the Aramco IPO. You can catch all the details below in Speed Round.

The date was announced by Al Arabiya during the opening day of the Future Investment Initiative Conference 2019, otherwise known as the “Davos in the Desert,” yesterday in Riyadh. This year’s conference turned out to be a much more fashionable affair than last year’s, including Indian Prime Minister Narendra Modi, White House adviser Jared Kushner, BlackRock CEO Larry Fink, and Goldman Sachs COO John Waldron. Both EFG Hermes CEO Karim Awad and Qalaa Holdings Chief Ahmed Heikal were present as guest speakers. Bloomberg took it upon themselves to explain the who’s who of the conference.

From the conference — Will Brexit kickstart the emergence of new global financial hubs? Awad spoke yesterday in a panel that included the likes of JP Morgan’s global head of investment and corporate banking Carlos Hernandez, the heads of both the Tadawul and the SIngapore stock exchanges, and UK Minister for Investment Graham Stuart. The panel looked at the rise of new global financial centers in the Brexit era and what that means for MENA. Awad stated that there’s room for more markets to take the lead and grow as financial hubs, singling out Saudi Arabia as a rising destination. New regulations & new listings will bring about massive change for Saudi, he added. “Once you start companies from Egypt, UAE or other markets listing in the Saudi Stock Exchange, this will be a very positive step for the market to become a hub,” Awad said. Hernandez agreed with Awad’s assessment that Saudi is on the right track.

Today’s agenda will look at the initiatives that will guide capital market development through the next decade of growth. A host of other interesting panels will look energy innovation, infrastructure investments, and developments on the Red Sea Project For the full program click here.

The ghost of Khashoggi haunts the gathering, says the foreign press: As expected the foreign press ripped into the conference, whose last iteration took place immediately following the backlash of the murder of Saudi journalist Jamal Khashoggi. The Financial Times’s assessment of the matter is that Saudi needs this conference to work. Getting investors into Saudi is a matter of life or death with the economy close to its second recession in three years, but keeping them there is a whole other ballgame. Investors are highly skeptical of the government’s repeated promises to limit involvement in businesses and allow the private sector to grow.

Investment Minister Sahar Nasr was the Sisi administration’s representative. Nasr spoke of women empowerment in emerging countries, and reforms her ministry is working on in Egypt to improve their capacity to participate in the economy, the ministry said in a statement.

The quarter-finals of CIB’s squash championships by the pyramids kicked off yesterday — and so far the semis are 75% Egyptian: Egyptian world no.1 Raneem El Welily went through to the next round after just three minutes when compatriot Nour El Tayeb retired from the game. In the semis El Welily will face Nouran Gohar, who beat the UK’s Sarah-Jane Perry 3:1. In the men’s round, Ali Farag triumphed over Daryl Selby and will face New Zealand’s Paul Coll, who beat Fares Dessouky. The second batch of quarter-final games takes place today, with Karim Abdel Gawad, Marwan El Shorbagy, Nour El Sherbini and Hania El Hamammy all in action.

Another US rate cut almost a dead cert as Fed wraps up November meeting: The Fed’s Open Market Committee will announce later today whether they will push ahead with a third consecutive rate cut. The market is 93.5% certain that we’ll see another 25 bps “insurance cut” by the end of the day, according to CME Group. This would take the Fed Funds rate down to the 1.5%-1.75% range.

There’s unlikely to be consensus though: Blue chip CEOs have been downplaying the possibility of a recession on unexpectedly strong 3Q earnings, which led the S&P 500 to record highs yesterday. The recent optimism may persuade more members to vote against a cut, widening the divisions seen last month when three officials came out against further easing.

What happens next? Market watchers will be paying close attention to Chairman Jay Powell’s post-meeting presser for clues as to whether we may be in for more cuts in the months ahead. For now, the market seems to think the Fed will hit the pause button, with investors giving a one-in-five chance of another cut at the December meeting. The Financial Times and MarketWatch have more.

Lebanese PM Saad Hariri resigns amid protests: Lebanese Prime Minister Saad Hariri stepped down from his position yesterday, acceding to the hundreds of thousands of protesters who have filled the streets demanding his resignation, the Associated Press reports. Hariri, whose departure is likely to fuel further uncertainty, said he had “hit a dead end” in his attempts to find a way out of the crisis. The country’s central bank governor said on Monday that the economy risks imminent catastrophe if a political solution is not found, with banks and many businesses having shut their doors for the past two weeks.

In other global miscellany:

  • Congress to hold vote on Trump impeachment: The US House of Representatives will on Thursday hold a vote to decide the timetable for public impeachment hearings against President Donald Trump. Plans would see hearings begin before Thanksgiving, and a vote on whether to impeach the president taking place before Christmas, Democratic Party sources said. (CNN)
  • The UK is heading for its third election in four years: Prime Minister Boris Johnson’s proposal for a 12 December election was voted through by MPs yesterday, paving the way for a five-week campaign that many hope will decide the fate of Brexit. (BBC)

Enterprise+: Last Night’s Talk Shows

It was a mixed bag on the airwaves last night: President Abdel Fattah El Sisi’s talks with the German foreign minister, Washington’s pledge to mediate the Grand Ethiopian Renaissance Dam (GERD) dispute, and Monday’s train incident in Tanta all received attention, as did yesterday’s dramatic political developments in Lebanon.

El Sisi discusses Syria, manufacturing and higher education with German FM: President Abdel Fattah El Sisi discussed the ongoing crisis in Libya with German Foreign Minister Heiko Maas during talks in Cairo yesterday. Maas on Monday called for an end to all “foreign interference” in Libya in a statement we suspect was at least partly aimed at Egypt, which has been busy funding General Khalifa Haftar’s forces in the east of the country. Ittihadiya said yesterday that the two sides “agreed on the importance of concerted and joint efforts by Egypt and Germany to settle the situation.” El Sisi and Maas also talked about the need for finding a political solution in Syria. Al Hayah Al Youm’s Khaled Abu Bakr (watch, runtime: 1:03) and Hona Al Asema’s Reham Ibrahim (watch, runtime: 1:59) were both taking notes.

Washington agrees to mediate GERD dispute: Masaa DMC’s Amr Khalil picked up the news that the US will step in to mediate the dispute between Egypt and Ethiopia over the Grand Ethiopian Renaissance Dam (watch, runtime: 2:48). We have the story in this morning’s Speed Round, below.

The “train ticket incident” caught the attention of the talking heads for the second day running. Twenty-three-year-old Mohamed Eid Attia died and another man was injured on Monday after a train conductor forced them out a moving train for not purchasing tickets. Abu Bakr covered Transport Minister Kamel El Wazir’s visit to offer condolences to the victim’s family, and said that the state has offered to cover the families’ legal expenses if they decide to press charges. He criticized the ministry for issuing an inaccurate statement that claimed the two men jumped from the train at low speed (watch, runtime: 8:09). The story was picked up in the foreign press, which we note in this morning’s Egypt in the News, below.

In related news: Five people were killed and two others were injured yesterday when a train crashed into a minibus, according to Ahram Online. The crash occurred at the Karnak railway crossing in the Badran region.

The talk shows weigh in on Lebanese political drama: Lebanese Prime Minister Saad Hariri submitted his resignation yesterday following almost two weeks of protests demanding political and economic reform. Abu Bakr aired Hariri’s resignation speech (watch, runtime: 5:46), while Reham Ibrahim phoned Rafiq Shalala, media advisor of Lebanse President Michel Aoun. Shalala noted that the protesters have welcomed the move, and that Aoun will make a statement accepting his resignation tomorrow (watch, runtime: 8:53).

Speed Round

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IPO WATCH- Aramco is set to begin trading on the Tadawul on 11 December, Al Arabiya reports: Saudi Aramco will start trading on the Saudi stock exchange on 11 December, Al Arabiya announced in a news flash yesterday. At the time of publishing, Aramco’s media office did not confirm the announcement, telling Bloomberg saying that it “does not comment on rumor or speculation,” and that the timing of the IPO depends on market conditions and decisions taken by the company’s shareholders. The announcement, which came during the first day of the Future Investment Initiative Conference 2019 (Davos in the desert), included the timeline of the IPO:

  • Sunday, 3 November: Saudi Arabia’s Capital Markets Authority is set to announce the start of the IPO process.
  • Sunday, 17 November: The share price on offer will be announced.
  • Wednesday, 4 December: Subscription to the offering will begin.
  • Wednesday, 11 December: First day of trading.

Size of the offering: The Saudi government is hoping to rake in USD 20 bn (it wants a company valuation of USD 2 tn) from the sale of 1% of Aramco on the Riyadh stock exchange in December. It is also has planned another 1% offering in 2020, sources told Reuters last month. The sales will be the jumping off point to a public sale of around 5% of Aramco at some later date.

Advisors: JPMorgan Chase, Morgan Stanley, Bank of America Merrill Lynch, Goldman Sachs Group, Credit Suisse Group, Citigroup, HSBC, Saudi Arabia’s National Commercial Bank, and Saudi Arabia’s Samba Financial Group, were all given the mandate for the IPO.

Is this the true resurrection, or just another zombie announcement: Although Aramco was recently termed the world’s most profitable business, bringing in a USD 111 bn annual net income in 2018, investors have baulked at the estimated USD 2 tn IPO valuation sought by Crown Prince Mohammed bin Salman. Bin Salman had been attempting to expedite the IPO, which had been mouldering, since the announcement of Saudi’s Vision 2030 in 2015. He appointed the head of the kingdom’s PIF sovereign wealth fund, Yasser Al Rumayyan, as Aramco’s new chairman, replacing long-time industry vet and former energy minister Khalid Al Falih (rumor had it that the latter was not as gung-ho about the IPO).

Timing may not be on Saudi’s side: Saudi Arabia’s stock market took a tumble for the third consecutive day with the index losing 1.2% and extending the the country’s losses for the third straight session, according to Reuters. The banking sector provided the greatest downwards push, but financial and real estate markets are also faring badly. Concerns over the US-China trade war had not helped emerging market equities this year, and that looks set to continue. Nonetheless, earlier this year, Aramco raised USD 12 bn in its first international bond issuance, on demand of around USD 100 bn.

This would suggest the resumption of Egypt's privatization program, which has been collecting dust awaiting the Aramco IPO. Public Enterprises Minister, Hisham Tawfik confirmed to Al Arabiya previous statements by NI Capital CEO Mohamed Metwally that the government is awaiting the results of the Aramco IPO before it proceeds, adding that two companies, Alexandria Container and Cargo Handling (ACCH) and Abu Qir Fertilizers, are ready to sell additional shares in the EGX. Tawfik said that the State Council has completed its legal review of standard contracts that will be used in the program, wrapping up all necessary procedures. The Aramco IPO, which could raise north of USD 20 bn, has been pulling liquidity from the global equity market as investors positioned themselves to move on a prospectus by November, Metwally had said.

But is Aramco really the only factor? Metwally had suggested that global headwinds including the US-China trade war, could lead to lower company valuations. NI Capital, which is the state-owned investment bank that serves as one of the coordinating body for a privatization program that includes minority stake sales in existing companies as well as the IPO of other assets, was hoping to see stakes offered in ACCH and Abu Qir Fertilizers by December at the latest. Both companies were originally slated to sell shares before Ramadan. So far only Eastern Tobacco sold shares as part of the program earlier this year.

HHD to decide on management and share sale in January or February: State-owned Heliopolis Housing and Development (HHD) is planning to award the management rights of the company in January or February, Tawfik told the press on Tuesday. HHD’s general assembly has yet to greenlight the draft contracts, which are ready, he noted, without disclosing the details of the contracts. Whoever wins the right to manage the company will also buy a 10% stake in the company.

Bidding on HHD management rights and 10% stake sale still open: HHD had not closed the window for private investors to submit bids to acquire a 10% stake with management rights. Tawfik has said that the previously announced deadline was not set in stone, and that HHD will continue accepting bids. A total of three undisclosed companies managed to meet the deadline. Eight companies were initially reported to have been interested in the company, including SODIC, EFG Hermes, BPE, Emaar Misr, and Orascom Development. HHD was originally scheduled to compile a shortlist of qualified bidders by mid-November before going ahead with a final round in December. Tawfik had said last month that the 10% stake on offer is part of a wider plan to offer for sale a 25% stake in the company.

Annual headline inflation should slow down to about 3% in October, down from 4.8% in September, according to Renaissance Capital’s Consumer Price Index (CPI) report. The report notes that the combined weight of the volatile fruits and vegetables has dropped to 6% in September from 18%, while other food and beverages items lost 7.8% in base weight. And this comes despite school tuition hikes in October coming into play.

RenCap sees 50 bps rate cut in November: The report adds that the current Central Bank of Egypt discount rate of 13.75% should be enough to stimulate private investment and a rebound in consumption growth and allow for an additional 50 bps cut on 14 November.

Renaissance Capital is expecting the EGP to depreciate once again, despite positive readings of the Egypt Balance of Payments. However, the investment bank sees this happening at a controlled pace. It did not state when it expects the depreciation to begin and by how much.

Background: Headline inflation had dropped for the fourth consecutive month to 4.3% in September from 7.5% in August, while annual core inflation almost halved to 2.6% from 4.9%. Radwa El Swaify, head of research at Pharos, had said that government focus on food supply has continued to keep inflation lower than expectations. The base effect remained a key factor in explaining the lower inflation readings, alongside the strength of the EGP and “more cautious spending behavior,” Beltone Financial said in a research note.

Raya issues securitized bonds worth EGP 500 mn: Raya Holding signed yesterday its first securitized bond issuance for its subsidiaries, Raya Electronics, Aman Financial Services, and Aman Microfinance, worth EGP 500 mn, Hapi reports. The issuance was in four tranches, three of which were short-term, with maturities of six, nine and twelve months. The fourth tranche had a 36 month matury. The weighted average coupon yield due to bondholders is about 12.7%. Raya Chairman and Managing Director Medhat Khalil sais that the move will help fund Raya’s plans to expand in Saudi Arabia, Nigeria, Dubai, and Poland without disclosing the sectors.

Raya aims to issue more bonds next year, but it’s anyone’s guess as to the size. Hapi puts the figure at EGP 700 mn, while Masrawy says the company is raising it to EGP 1 bn.

CIB, the National Bank of Egypt and Attijariwafa Bank managed the issuance. CIB held the largest share of the issuance with EGP 275 mn, while NBE’s share was was EGP 150 mn. Attijariwafa Bank managed EGP 75 mn of the issuance, Raya CFO for Investments Hossam Hussein said at a press conference yesterday. Dreny & Partners Law Firm acted as legal counsel.

Meanwhile, CIB is considering several new securitized bond issuances in Egypt, CIB CEO Hussein Abaza told Al Mal without hinting the company nor the amount. The increase in financial inclusion will help the banking sector shore up its liquidity, and make financial products geared towards corporate funding much more appetizing. Abaza also noted that CIB is still working to further expanding into another African country following the opening of it representative office in Ethiopia in April. CIB intended to enter the Kenyan market when it finds the right opportunity as part of its strategy for expansion in east Africa, our friend Mohamed Sultan had said before. CIB has also identified Tanzania and Uganda as being potential markets for expansion.

Meanwhile, EFG Hermes closes first short-term securitized bond issuance for Premium International: The Raya issuance came as EFG Hermes closed its first short term securitization transaction in Egypt worth EGP 167 mn for consumer finance company Premium International for Credit Services, according to a company statement (PDF) yesterday. The issuance consists of a single 10-month tranche rated “Prime 1 Rating” — the highest rating by Middle East Ratings and Investor Services (MERIS). EFG Hermes acted as the sole financial advisor, sole arranger, and co-underwriter along with The Arab African International Bank, which is also the custodian. Dreny & Partners acted as the Legal Advisor and KPMG acted as the Financial Auditor for the transaction.

Premium to issue EGP 2 bn in the coming two years: “We look forward to working closely with Premium with regards to the remaining issuances under the first short term program, approved by the FRA in October, amounting to a total of EGP 2 bn over a period of two years,” said the Co-head of investment banking at EFG Hermes Mostafa Gad.

EFG to ratchet up securitized bond issuances this year: “EFG Hermes is also in the process of closing the first unsecured short-term note in the Egyptian market along with a new securitization transaction in the fourth quarter of 2019, notwithstanding several other securitization and bond issuances currently in the Investment Banking Division’s pipeline,” the investment bank said.

M&A WATCH- NBG employees dismiss company’s claims for exiting Egypt: National Bank of Greece (NBG) employees have rejected the company’s justification for exiting Egypt, saying in a statement yesterday that its sale to Bank Audi is for non-financial reasons, and that it cannot therefore turn to labor law regulations to reduce or waive its employees’ rights.

What does the law say? Under normal circumstances, companies are required to pay redundancy compensation equivalent of two months’ salary for each year they have worked in the company. However, according to articles 196-201 of the labor law, a loss-making company is able to terminate employee contracts for economic reasons, and pay them a reduced remuneration equal to one month’s pay for each year of service for the first five years, and one-and-a-half month’s salary for each year after that. By appealing to these stipulations, NBG would be able to pay less severance to its employees.

What are the employees arguing? The employees say NBG cannot invoke rights afforded to separate legal entities that are formed in accordance with Egyptian lawsince it operates in the country as a branch of a foreign company. Furthermore, foreign banks operating in the country have an obligation toward the central bank to cover the losses of its branch in Egypt. The sale therefore cannot pass as a “forced” or “economic” dissolution, especially since NBG’s net consolidated bottom line is positive.

Background: NBG’s employees have been claiming that they are entitled to a severance payment equivalent to two months’ salary for each year they have worked at the company. This came after the bank decided to exit the market last year as part of a wider plan to reduce its overseas presence under an EU-supervised restructure. Bank Audi had announced it will acquire NBG's Egypt arm, including a book of “mostly of Egyptian-risk loans, deposits and securities (total assets of c. EUR 110 mn), a branch network of 17 branches and c. 250 employees,” and has been awaiting CBE's approval to complete the transaction. The dispute prompted both banks earlier this week to talk about asking the CBE to extend a grace period for the transaction that end on 2 November. This came after the news that the employees requested that the central bank intervene.

IPO WATCH- Misr Italia postpones IPO to 2H2020: Property developer Misr Italia has postponed its plans to offer 25% of its shares in an IPO on the EGX to the second half of next year, CEO Mohamed El Assal told the press. The IPO is expected to increase the company’s capital by EGP 1-1.5 bn, El Assal added. The company’s chairman, Hany El Assal, told Al Mal in July that the IPO could kick off in the first half of the year. He said at the time his company is expecting to raise EGP 2 bn from the listing and will use the proceeds to finance ongoing projects, including the EGP 20 bn Il Busco and EGP 10 bn Vinci compounds in the new capital.

Correction: 30/11/19.

A previous version of this article incorrectly stated that Misr Italia hired EFG Hermes to conduct an asset valuation.

LEGISLATION WATCH- FEI wants to extend the customs exemption in the draft Customs Act: The Federation of Egyptian Industries (FEI) is pushing for changes to the draft Customs Act that would extend the customs exemption period for importers of raw materials by six months, according to a memo seen by the press. The current legislation grants manufacturers and exporters with a one-and-a-half year exemption period, which can be extended by a further year. The FEI’s proposal would increase this period to two years (or three years with the extension). The federation joins the Egyptian Businessmen Association, which called for the same changes last week.

Who would this affect? The draft that is currently in the hands of our legislators grants temporary duty exemptions for a period of one-and-a-half years for intermediary goods imported by manufacturers and exporters. The importer would have to submit a bank guarantee until the goods are exported within the set period, which can be extended for an additional year.

Proposals for sector-specific exemption periods: FEI deputy head Mohamed Saad El Din suggested that lawmakers legislate different exemption periods for different sectors. The reasoning? A more flexible system would better suit industries whose production cycles extend beyond or fall short of two years.

Federation also wants customs and import fee refunds to be made after two years: The memo asked that intermediate goods for which an exemption wasn’t granted be eligible for a refund within two years, instead of one as is currently the case in the draft law. This would apply to raw materials brought in by local exporters, goods which have been moved customs-exempt special economic zones, or those sold to an entity not subject to customs duties. The rationale here is the same as above: To give companies enough time to produce their goods and export them.

And better wording in violation articles: The FEI wants to draw a line between customs evasion and more serious cases of substance or weapon trafficking. Only the latter cases deserve prison sentences, Saad El Din said.

Background: The amendments are part of larger changes that aim to expedite customs clearance, create a “whitelist” of trusted importers, and broaden the Customs Authority’s discretion. They would also include customs breaks to incentivize local manufacturers. They are currently pending committee-level approval before they are placed up for a final vote in a general assembly meeting and signed into law by the president.

US steps in to mediate in the Egypt-Ethiopia GERD dispute: The US has invited members of the Egyptian, Ethiopian and Sudanese governments to Washington on 6 November to try and resolve the dispute surrounding the Grand Ethiopian Renaissance Dam (GERD, Foreign Minister Sameh Shoukry said at a press conference yesterday, according to Reuters. Egypt last week accepted an offer from the US to mediate the dispute before President Abdel Fattah El Sisi and Ethiopian Prime Minister Abiy Ahmed agreed at the Russia-Africa summit to resume technical talks.

It’s best not to read too much into this at the moment: It is still not clear whether the meeting will actually go ahead, with Ethiopia and Sudan yet to agree to US mediation. Ethiopia in particular has been staunchly opposed to the involvement of any third parties, and while El Sisi and Ahmed did agree to return to the negotiating table, the statement did not mention anything about mediation.

MOVES- Prime Holding has tapped Nevine Taher (LinkedIn) as the managing director of alternative investments, the company said in a statement (pdf). Taher has more than 30 years’ experience working in the financial sector.

Egypt saw the third largest annual decrease in terrorism risk globally between May 2018 and May 2019, according to a global assessment by insurance broker Marsh, which gave us a World Risk Review score of 7.0 in its 2019 Terrorism Risk Insurance Report (pdf). The World Risk Review provides ratings across the security, trading and investment environments across the world. The higher the figure, the riskier the environment. Our decrease in terrorism risk by a factor 1.1 was behind only South Sudan and China, due to the government’s February 2018 counterterrorism campaign, which has reduced attacks to the west of the Suez Canal. Daesh retains capabilities in Sinai, however, and is likely to continue attacks against religious minorities and security forces, the report says.

In MENA, the rate of terrorism is declining, but the landscape is diversifying: More than half of global terrorist attacks on public areas took place in the MENA region between 2014 and 2018, according to the report. The attacks numbered 1,940 and they caused 15,512 deaths. But despite declining since 2017, attacks increasingly target both civilians and infrastructure at large. Both Egypt and Saudi Arabia face the threat of international energy and fuel suppliers being targeted, with roadside IEDs posing particularly high risks to cargo in Egypt, especially along the Suez-Ismailia-Port Said road. Regionally, Yemen’s Houthi militants have shown that they have both the intent and capability to target aviation facilities, sea vessels and oil infrastructure. And the energy sectors of both Algeria and Iraq remain especially vulnerable to cross-border attacks.

This trend is also being exhibited at the global level: 2018 saw 15,819 acts of terrorism, insurgency, and politically or ideologically motivated violence, resulting in 13,570 fatalities. This is a significant decrease from 21,274 attacks committed in 2014. But the evolving nature of terrorism means that new threats are likely to emerge, with increasingly decentralized structures making them particularly difficult to counter.

And the global economic impact of terrorism shot up to USD 83 bn per year between 2013 and 2017: The global economic impact of terrorism has skyrocketed in the past decade, with Marsh estimating that total costs average out at USD 83 bn per year between 2013 and 2017 — roughly a fourfold increase from between 2002 and 2007. Tourism and retail are particularly vulnerable sectors, with businesses losing an estimated USD 1.4 mn from the 2017 London Bridge attack alone.

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Egypt in the News

Monday’s train incident is leading the conversation on Egypt in the foreign press: A train conductor accused of causing the death of a man named Mohamed Eid Attia and inflicting injuries on another has been arrested, the Transport Ministry said in a statement. The official reportedly forced both men to jump out of a moving train after discovering they didn’t have a ticket. Minister Kamel El Wazir paid a visit to the 23-year-old victim’s family yesterday, according to a separate statement seen by the press. The Associated Press, BBC and the National all picked up the story.

Other stories worth noting in brief include:

  • A piece of Greek History in our very own backyard: The Greek City Times is bringing to light the historical Greek cemetery in Alexandria, home to the beautiful tombs of many prestigious Greeks.
  • Entrepreneur profiled one of the founders of the tuk tuk ride-hailing app, Halan, and discussed its expansion into various markets, their funding ventures, and future partnerships.

Worth Reading

EXPLAINER- Why World Bank annual business rankings significantly impact government policy: Since its 2003 inception, the World Bank’s annual Ease of Doing Business report has grown to become a key yardstick for measuring economic indicators, and now has a significant impact on policy and regulation across the world, the Economist writes. Research shows a clear correlation between Doing Business rankings and public governance priorities, with many governments gearing their policies specifically towards moving up in the rankings specifically. India, China and Saudi Arabia, all of whom soared up the rankings in recent years, made a concerted effort to improve their regulatory climates — spurred on (at least in part) by the report.

Egypt is one of 42 economies that has undertaken regulatory reform in three or more of the 10 categories, the 2020 report shows (pdf). And having risen from #131 in 2016 to #114 this year the reforms are clearly having an effect.

Just why does the annual report spur governments to action? Researchers point out that the Ease of Doing Business indicators have a “tremendous” market share, and while this is partly due to the World Bank’s reputation and status, it’s also because of the way the information is put to use. The rankings allow members of the public to lobby for reform within their countries, employing comparisons with rival states to spur competition. Rankings are more accessible yardsticks than lengthy reviews, and so governments are more likely to take action to improve a particular aspect of their country’s business climate in response to a ranking — especially if it compares unfavorably with that of a rival country. Significantly, research shows that the indicators have a measurable impact on the attitudes of potential investors, encouraging governments to make speedy regulatory changes in the hope of attracting more FDI.

Worth Watching

If you happened to come across Facebook’s CTO in an elevator, what would you ask him? WSJ’s Joanna Stern had a lot of questions during this awkward five-minute ride. The pair discussed everything from global concerns over Libra, to Facebook’s privacy controversies and the future of augmented reality (watch, runtime: 04:23).

Diplomacy + Foreign Trade

Senior US diplomat criticizes treatment of journalist Esraa Abdel Fattah: The US State Department’s chief diplomat for the Middle East described the treatment of activist journalist Esraa Abdel Fattah as “outrageous” during a congressional hearing, Reuters reports. Abdel Fattah was detained by authorities earlier this month in connection to the recent protests, and later claimed that she had been subjected to torture while in police custody. “I met her several times, I think it is outrageous. Know that I’ve had the Egyptian ambassador in my office last week to talk about Esraa… “Egypt has a long way to go on human rights,” said David Schenker, assistant secretary for the State Department’s Bureau of Near Eastern Affairs.

Basic Materials + Commodities

Steel prices hit four-year low amid falling demand

Factory prices of steel rebar have fallen below EGP 10k per ton, its lowest level since the EGP float, the CEO of steel distributor El Massia, Khaled El Degwy, said. Factories have slashed prices by EGP 1k per ton for wholesalers on the back of falling global prices and weak domestic demand. Ezz Steel has lowered its sale price of rebar by EGP 1k to EGP 9.9k per ton, and its roll price by EGP 900 to EGP 9.8k per ton. El Garhy steel lowered its prices for the third time this month to EGP 9.5k per ton, the lowest price on the market. Factories have cut prices repeatedly this month as local demand falls and producers face increasing competition from international companies.

Telecoms + ICT

SICO to begin exporting phones to Germany next month

Egyptian smartphone maker SICO will begin exporting it’s Nile X phones and other devices to Germany in November, Chairman Mohamed Salem told Reuters. SICO already exports 25% of its products to the Gulf, but aims to increase this to 50% next year and expand into European and African markets. “We will begin exporting from Upper Egypt to Germany, Holland, Austria, and then Sweden, Norway and Finland,” Salem said. SICO, established in December 2017, is Egypt’s first smartphone manufacturer.

On Your Way Out

The Giza Zoo is getting a EGP 400 mn facelift to improve several parts of the zoo and animal enclosures, Central Department of Zoos boss Mohamed Ragaei tells Al Mal. The Giza Zoo recently gained three new baby animals, one of which is an endangered species.

The Market Yesterday

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EGP / USD CBE market average: Buy 16.07 | Sell 16.19
EGP / USD at CIB:
Buy 16.07 | Sell 16.17
EGP / USD at NBE: Buy 16.09 | Sell 16.19

EGX30 (Tuesday): 14,465 (+1.2%)
Turnover: EGP 913 mn (17% above the 90-day average)
EGX 30 year-to-date: +11.0%

THE MARKET ON TUESDAY: The EGX30 ended Tuesday’s session up 1.2%. CIB, the index’s heaviest constituent, ended up 1.4%. EGX30’s top performing constituents were Sidi Kerir Petrochemicals up 5.9%, AMOC up 4.4%, and Orascom Construction up 4.0%. Yesterday’s worst performing stocks were Cleopatra Hospital down 0.2%, CIRA down 0.2% and Eastern Co down 0.1%. The market turnover was EGP 913 mn, and foreign investors were the sole net sellers.

Foreigners: Net short | EGP -41.8 mn
Regional: Net long | EGP +17.8 mn
Domestic: Net long | EGP +24.0 mn

Retail: 65.7% of total trades | 66.6% of buyers | 64.7% of sellers
Institutions: 34.3% of total trades | 33.4% of buyers | 35.3% of sellers

WTI: USD 55.54 (+0.0%)
Brent: USD 61.59 (+0.0%)

Natural Gas (Nymex, futures prices) USD 2.60 MMBtu, (+6.2%, December 2019 contract)
Gold: USD 1,489.70 / troy ounce (-0.1%)

TASI: 7,693 (-1.2%) (YTD: -1.70%)
ADX: 5,075 (-1.2%) (YTD: +3.3%)
DFM: 2,739 (-1.4%) (YTD: +8.3%)
KSE Premier Market: 6,280 (-0.1%)
QE: 10,220 (-0.0%) (YTD: -0.8%)
MSM: 4,004 (-0.0%) (YTD: -7.4%)
BB: 1,524 (+0.1%) (YTD: +14.0%)

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Calendar

October: A forum will be organized by Russia’s Rosatom and the Nuclear Power Plants Authority to introduce local suppliers and contractors to the Dabaa nuclear plant.

October: German businessman delegation will visit Egypt to discuss good projects in order to spend German funds into Egypt.

October: A delegation of 40-50 Saudi companies will visit Egypt to discuss increasing exports of Egyptian furniture.

23 October-1 November (Wednesday-Friday): CIB PSA Women’s World Championship, Great Pyramid of Giza, Cairo.

28 October-22 November (Monday-Friday): World Radiocommunication Conference 2019, Sharm El Sheikh, Egypt.

28 October-31 October (Monday-Thursday): A Cairo court will rule on the stock manipulation case, in which Gamal and Alaa Mubarak are involved, along with seven other defendants.

29-30 October (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review key interest rates.

29-30 October (Tuesday-Wednesday): South Sudan Oil & Power (SSOP) Conference, Juba, South Sudan.

29-30 October (Tuesday- Wednesday): 10th African Food Day Conference, Cairo, Egypt

31 October-2 November (Thursday-Saturday): Angel Oasis 2019, organized by the Middle East Angel Investment Network (MAIN), El Gouna, Egypt.

November: Suez Canal Conference for Investment, organized in cooperation with the European Union

November: The government will host the Egypt Economic Summit with 40 speakers and experts across all economic fields to discuss the country’s vision post the IMF program.

November: British Egyptian Business Association’s Annual door knock mission, United Kingdom.

November: ITIDA to announce the winning bid in a tender to manage three new innovation centers.

3 November (Sunday): Real Estate Debate 2019 Conference – Catalysts for Growth in 2020, Cairo Marriott Hotel.

4 November (Sunday): Saudi Arabia’s Capital Markets Authority is set to announce the start of the IPO process (expected).

3-5 November (Sunday-Tuesday): Electrix 2019, Egypt International Exhibition Center, Nasr City, Cairo.

4 November (Monday): Narrative PR Summit, Hilton Heliopolis, Cairo.

4-6 November (Monday-Wednesday): Egypt’s Chamber of Tourism Establishments will participate in the UK’s World Travel Market (WTM) event in London.

7 November (Thursday): AmCham will hold the Prosper Africa Event.

7-9 November (Thursday-Saturday): BiznEx Egypt 2019, Egypt International Exhibition Center, Nasr City, Cairo.

8-22 November: Egypt will host Under-23 Africa Cup of Nations 2019.

9 November (Saturday): Prophet Mohammed’s birthday, national holiday.

9-11 November (Saturday-Monday): Vested Summit, Sahl Hasheesh, Red Sea.

10-14 November (Sunday-Thursday): GeoMEast International Congress and Exhibition, Marriott, Cairo.

11-13 November (Monday-Wednesday): Africa Investment Forum, Gauteng, South Africa.

12 November (Tuesday): Egypt Economic Summit, venue TBA.

13-15 November (Wednesday-Friday): Africa Early Stage Investor Summit, Cape Town, South Africa.

14 November (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

14-17 November (Thursday-Sunday): Machtech Expo, Egypt International Exhibition Center, Nasr City, Cairo.

14-17 November (Thursday-Sunday): Transpotech Expo, Egypt International Exhibition Center, Nasr City, Cairo.

14-17 November (Thursday-Sunday): Airtech Expo, Egypt International Exhibition Center, Nasr City, Cairo.

17 November (Sunday): The share price for the Aramco IPO will be announced (expected).

18 November (Monday): AmCham’s US-Egypt Proposer Forum in Cairo. US trade delegation visits Cairo to discuss investments in health, energy and information technology as part of the gathering.

20-29 November (Wednesday-Friday): Cairo International Film Festival, Cairo Opera House, Egypt, Cairo, Egypt.

20 November (Wednesday): The Investment Ministry and the Islamic Development Bank will organize the “leaders for change” startup competition as part of the Fekretak Sherketak initiative, location TBD, Cairo, Egypt.

22-23 November (Friday-Saturday): Invest in Africa 2019 conference, New Administrative Capital.

24 November (Sunday): Arabia Investments lawsuit against French Peugeot (after being postponed)

25 November (Monday): Global Trade Matters international dialogue on climate neutrality, Marriott, Cairo.

December: Egypt will host for the first time the Pack Process trade expo for the Middle East and African region.

December: Indian automotive delegation to visit Egypt

1-4 December (Sunday-Wednesday): E-payment and Innovative Financial Inclusion Expo and Forum (PAFIX), Egypt International Exhibition Center, Nasr City, Cairo.

3-6 December (Tuesday-Friday): Cairo WoodShow, Egypt International Exhibition Center, Nasr City, Cairo.

4 December (Wednesday): Subscription to the Aramco IPO will begin (expected).

5-7 December (Thursday-Saturday): RiseUp Summit, American University in Cairo, New Cairo Campus

8 December (Sunday): Pitch by the Pyramids, Giza Pyramids

9-11 December (Monday-Wednesday): Pacprocess Middle East Africa, Egypt International Exhibition Center, Nasr City, Cairo.

9-11 December (Monday-Wednesday): Food Africa 2019 Expo, Egypt International Exhibition Center, Nasr City, Cairo.

10-11 December (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

11 December (Wednesday): First day of trading on the Aramco IPO (expected)

12-14 December (Thursday-Saturday): 16 Egyptian real estate development companies will showcase their products at IPS Riyadh, Riyadh, Saudi Arabia

14-17 December (Saturday-Tuesday): World Youth Forum 2019, Sharm El Sheikh.

26 December (Thursday): Central Bank of Egypt’s monetary policy committee will meet to review interest rates.

January 2020: 2019 Confederation of African Football (CAF) Awards, Albatros Citadel Resort, Hurghada, Egypt.

January 2020: UK-Africa Investment summit, London, United Kingdom.

9-12 January 2020 (Tuesday-Sunday): PLASTEX, Egypt International Exhibition Center, Nasr City, Cairo.

25 January 2020 (Saturday): 25 January revolution anniversary / Police Day, national holiday.

25 January 2020 (Saturday): Midterm break for public schools and universities. Also known as: Two weeks of good commute.

February 2020: An Italian business delegation will visit Egypt to discuss investments in the Port Said industrial zone.

8 February 2020 (Saturday): Midterm break ends. Traffic in Cairo stinks once more.

11-13 February 2020 (Tuesday-Thursday): Egypt Petroleum Show, Egypt International Exhibition Center, Nasr City, Cairo.

March 2020: The Middle East and North Africa Financial Action Task Force (MENAFATF) will visit Egypt to assess the progress of actions taken to combat money laundering and terrorist sponsoring activities.

4-5 March 2020 (Wednesday-Thursday): Women Economic Forum, Cairo.

25-26 March 2020 (Wednesday-Thursday): Mega Projects Conference, Egypt International Exhibition Center, Nasr City, Cairo.

23 April 2020 (Thursday): First day of Ramadan (TBC).

23-26 May 2020 (Saturday-Tuesday): Eid El Fitr (TBC).

5-7 May 2020 (Tuesday-Thursday): AFSIC – Investing in Africa, London, United Kingdom.

30 June 2020 (Sunday): June 2013 protests anniversary, national holiday.

November 2020: Egypt will host simultaneously the International Capital Market Association’s emerging market, and Africa and Middle East meetings.

30 July 2020-3 August 2020 (Thursday-Monday): Eid El Adha (TBC), national holiday.

19-20 August 2020 (Wednesday-Thursday): Islamic New Year (TBC), national holiday.

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